What Social Media Site Will Kill Facebook?

by Brad Moon | February 4, 2014 11:50 am

Facebook (FB[1]) had one of most highly anticipated — and highly unusual — IPOs in recent memory. There have been some rocky periods since then, and at one point FB stock was well under the IPO price[2].

[3]But things are looking up for FB stock.

Facebook’s improved performance signals a company still in ascendancy. Solid revenues show the company is becoming a force to be reckoned with in mobile advertising[4], not to mention the hotly anticipated new smartphone app[5] — designed by a team of developers snagged from Apple (AAPL[6]). FB stock is still flirting with record highs over $60, which suggests investors are likewise optimistic.

But while Facebook celebrates its 10th birthday on a high note, it’s worth remembering that the tech industry is littered with the remains of failed social media networks[7]. With Facebook’s growth rate slowing and its membership growing older (concerning because younger users could make another platform the “next big thing”), there’s risk that Facebook could find itself left behind — just like MySpace before it.

Facebook has a sense of humor about the risks ahead (famously debunking a Princeton study suggesting it would lose 80% of its users[8] within two to four years), but the fact remains there are a lot of companies gunning for Facebook. Some have a shot at succeeding.

What social media site will kill Facebook? Here are four possibilities.

What Social Media Site Will Kill Facebook? Twitter

[9]When you talk about Facebook threats, the one that’s most frequently cited these days is Twitter (TWTR[10]). Twitter was made for the mobile age, it attracts a younger demographic than Facebook (according to Statista more than half of Twitter visitors last October were under 35[11]), it has 232 million users, and it continues growing at a rapid pace.

Twitter appeals to mobile users who want to share what they think and what they see and do it quickly.

Facebook in comparison, is more mature, started on the desktop and is still adapting to a mobile world. It attracts an older demographic, and its growth in user base has slowed significantly[12].

Could Twitter actually kill Facebook? It’s not likely — at least not any time soon — although if younger users continue to choose Twitter over Facebook, that’s eventually going to cause a decline in Facebook’s user base, Facebook revenue and FB stock.

Business Insider thinks that, if Twitter had beat Facebook to the Instagram punch, that popular photo sharing capability combined with its Vine video sharing could have actually have dealt a fatal blow[13] to FB stock.

What Social Media Site Will Kill Facebook? Google+

[14]It’s easy to dismiss Google’s (GOOG[15]) Google+ as yet another example of Google throwing something at the social media wall to see if it will stick. After all, the company has already launched and buried Google Wave and Google Buzz.

Google+ users may spend mere minutes per month on this social media site compared to the hours that Facebook members spend, but Google+ has seen impressive growth in its user base.

At an October Google+ event[16], GOOG announced a slew of new features and reported significant improvements in activity. The company said there were now 540 million active Google+ members (Facebook claimed 1.19 billion at that time) who are uploading 1.5 billion photos monthly. Video sharing also increased by a factor of 20.

Google has pushed the advantages of its social media site, positioning it as both a social and professional network. The company has leveraged the dominance of Google search, pointing to Google+ posts and incorporating Google+ hooks into YouTube and its other services.

In other words, Google+ may not have the user engagement rate — or “stickiness” — of Facebook, but it’s gaining. And in a little more than two years, it went from zero users to nearly half the membership of Facebook.

GOOG is huge compared to FB stock ($57 billion in annual revenue compared to $7.87 billion) and if GOOG decided that Google+ as a social media site was a big part of its future and important enough for an all-out assault, it has the resources to make life unpleasant for FB stock holders.

What Social Media Site Will Kill Facebook? WeChat

[17]We tend to look at the rise of the social media site as a U.S. or Western thing, but it’s not. As emerging markets like China and India increasingly become connected, the sheer number of users in those markets will dwarf the North Americans and Europeans who have been driving the social media wave.

Facebook is banned in China, making it virtually impossible for that country’s 1.4 billion residents to access the social media site. But China has its own solution in WeChat (formerly Weixin). It already has 300 million users and — more alarmingly for FB stock — the number of overseas users doubled to 100 million[18] last year.

According to the New York Times, WeChat rivals Facebook for stickiness[19], thanks to owner Tencent’s (TCEHY[20]) position as an Internet portal and online game leader in China[21].

WeChat continues to add services like photo and video sharing, it’s the dominant social media site in China and owner Tencent is actively targeting India and Western markets. If you were to ask what a social media site will kill Facebook, WeChat can’t be overlooked.

What Social Media Site Will Kill Facebook? Path? Apple? Pheed?

[22]Wait — no fair, that’s a bunch of names. And could any of those companies really field a social media network that people would ditch Facebook for en masse?

Path is probably best known for getting busted after copying and uploading contact info[23] from users’ devices. But it remains a popular choice for the socially connected, with 20 million users, a fast growth rate and partnerships signed with telcos and hardware manufacturers.

Pheed is often compared to a Facebook for the younger generation, complete with the ability to access pay-per-view concerts on a mobile device[24] — teens are downloading it like crazy.

Apple? Its shot at social media networks with Ping may have been a failure, but iPhone users are a core (and highly profitable[25]) demographic for Facebook. If Apple decided to get serious about releasing its own social media site, FB stock would hardly react positively, and it could be the start of bigger problems for the current social media leader.

The point is, when it comes to what social media site will kill Facebook, the threat could come from anywhere.

It could be an established competitor in the social media space, like Twitter. But just as easily, it could be an app with a few million users that’s just picking up steam, a tech titan looking to a social media site as a new line of business or an overseas competitor that sets its sights on Western expansion.

If you own FB stock, it’s important to realize that threat is always there and always will be until Facebook no longer has all its eggs in the social media basket.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Endnotes:

FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB

at one point FB stock was well under the IPO price: http://www.nytimes.com/2012/07/27/technology/facebook-reports-a-loss-but-its-revenue-beats-expectations.html?_r=0